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IBRD and IDA: Working for a World Free of Poverty.enHow Better Protection for the Elderly Could Lower Fertility Rates in Ugandahttp://blogs.worldbank.org/futuredevelopment/how-better-protection-elderly-could-lower-fertility-rates-uganda
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<img alt="" height="440" src="/futuredevelopment/files/futuredevelopment/Kampala_Weaverwoman.jpg" style="float:left" title="" width="360" />A typical Ugandan woman gives birth to an average of seven children, far higher than for other countries, including neighboring Kenya and Tanzania. There are many factors that push Ugandan woman to give birth to many children. For instance, low levels of schooling of women in Uganda often result in early marriage and early pregnancy. Inadequate access to family planning services, as well as cultural pressures that reward women for having many children, also contribute to Uganda’s high fertility rates. However, another important reason for Uganda’s high prolificacy is that children are a way of ensuring parents are taken care of after when they retire from active employment and can no longer fend for their livelihood. This incentive is particularly acute due to the fact that the Uganda pension system does not reach the majority of the country’s population. Today, although the elderly are still few in numbers (i.e., less than 5 percent of the population), only 2 percent of them are receiving a pension. Children are therefore perceived as a form of pension to many Ugandans because the majority of the population is not covered by any other system of protection.</p>
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How can Ugandans be more secure in their old age without relying on a large number of children? Many have argued that with a per capita income of US $510, the majority of Ugandans are too poor to save. But didn’t South East Asian countries like Korea and Thailand start building savings back in the sixties, when their incomes were low, at the same level as Uganda now? Increasing incomes may help, but more importantly, the availability of systems that encourage people to save has to improve. In this respect, a better functioning pension system would be useful. Currently, Uganda has a multi-tiered pension system. The national social security fund mandated with ensuring that the workers within the private sector have a pension currently covers about 450,000 people out of the possible 2.5 million. NSSF has also suffered management problems, fraud and corruption, leading to only limited returns for savers. Indeed, many have no confidence in the pension system.&nbsp; &nbsp;&nbsp;<br />
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The government of Uganda has its work cut out to ensure that the series of reforms to the pension sector it has initiated indeed improve the coverage, adequacy, security, sustainability and efficiency of the pension system. It has established a regulator to oversee the operations of the sector, proposed the liberalization of the private pension system to allow more competition and choice by workers, and also proposed reforms to the public pension system to improve its efficiency and to ensure its sustainability.<br />
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Going forward, there are still a number of challenges to be addressed. The newly established <a href="http://urbra.go.ug/" rel="nofollow">Uganda Retirement Benefits Regulatory Authority (URBRA)</a> will, among other things, have to manage the risks related to fraud and corruption and the rise in costs that would further reduce return on pension savings. Even though competition is expected to lower costs, the reverse could arise as many pension operators incur costs of marketing, among others. This has been a problem in many countries, and hence needs to be addressed with appropriate transparency, regulation and managed competition, such as through cost caps.<br />
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In addition, limited development of the financial market may restrict the benefits from a liberalized pension system, while informality of the labour markets and the high cost of universal pension systems may constrain extending coverage.<br />
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Finally, transition costs could triple fiscal spending on public pensions before it would eventually decline, as the public sector scheme is converted into a contributory system. These transitional costs will occur as the government will be paying the existing pensioners' benefits while starting to contribute to the new public service pension fund. This cost will have to be properly planned for within the national budget.<br />
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Experience from other countries, including those in the African region, shows that, although never easy and often controversial, successful reforms can be implemented to build efficient pension systems. For Uganda, it would make good economic sense to do this while the population is still young. Waiting will only cause the costs to increase. And there is no doubt that a well-functioning pension system can support other interventions, such as formal education and provision of family planning education and facilities, to reduce the fertility rate in Uganda.&nbsp;&nbsp;<br />
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In depth discussion of these issues can be found in the <a href="http://www.worldbank.org/en/country/uganda/publication/uganda-reducing-multiple-vulnerabilities-should-improve-pension-system" rel="nofollow">World Bank’s Fourth Uganda Economic Update, entitled “Reducing Old Age and Economic Vulnerabilities – Why Uganda Should Improve its Pension System.”&nbsp;&nbsp;</a><br />
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Thu, 28 Aug 2014 15:30:00 -0400Rachel K. SebuddeJobs: Can Uganda secure the future for its youth? http://blogs.worldbank.org/nasikiliza/jobs-can-uganda-secure-future-its-youth
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<img alt="" src="http://blogs.worldbank.org/nasikiliza/files/nasikiliza/images/jobs-can-uganda-secure-future-its-youth.jpg" style="height:360px; width:540px" /><br />
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When Mukisa joined the 62<sup>nd</sup> Makerere University graduating class in January 2012, he had already made up his mind to walk a very different path from those who graduated from the same Kampala university 30 years ago. Back then, jobs were waiting for graduates, who joined formal employment that afforded them a decent living. Today, only 20% of new entrants onto the Ugandan labor market find formal jobs, leaving the rest to self-employment and other informal activities. So Mukisa started a business in plant nurseries to tap into the demand for gardening materials for the booming construction industry in the city. He has gradually acquired the technical and entrepreneur skills for his business, but wishes for better access to capital and land, and less harassment by local authorities, to expand his business.</p>
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According to the World Bank’s Second <a href="http://www.worldbank.org/en/country/uganda/publication/uganda-economic-update-jobs-key-to-prosperity" rel="nofollow">Uganda Economic Update, Jobs: Key to Prosperity</a>, Mukisa’s plight is just a tip of the iceberg for Uganda’s challenge of creating jobs. First, even as growth created many jobs, many educated youth are increasingly finding it difficult to find jobs that match their training. Second, the majority of the labor force works in low productivity sectors that cannot drive economic transformation to prosperity, partly because the bulk of labor force is unskilled. Third, with about 500,000 workers joining the labor market every year, the future job prospects are even graver than it is today.<br />
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Mukisa is one of more than &nbsp;two million workers in the informal sector who may be counted out of poverty, but produce too little to move into prosperity. Another 11 million workers (73%) find themselves working in agriculture, many of them unproductively. This was underscored by the Prime Minister of Uganda, Hon. Amama Mbabazi, as he launched the economic update on August 13, 2013.<br />
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“In 2010, value added per worker in Uganda’s agriculture was US$200, in contrast to Brazil’s US$4183 per worker per year,” he said. “Yet the lack of access to modern technologies, high cost of inputs and transport, and land rights insecurity, leave most jobs in agriculture in the subsistence sector.”<br />
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For future jobs to be more rewarding, the labor force has to work in activities producing increasingly higher value. Raising productivity on the farm is the first point of action given the bulk of the labor force will continue to work in agriculture for years to come. This is one of the five pillars for creating ‘good jobs” highlighted by the Update. However, labor eventually has to move off the farm, calling for attention to the growth of non-agricultural firms, formal or informal, and mainly in urban areas. Some quick gains can be made in promoting the development of clusters and full value chains for strategic sectors, in particular light manufacturing, exportable products, building and construction, and the oil industry; industrial zoning to improve business environment for many firms , particularly where clusters are already forming; and linking large and small (mainly informal) manufacturers to raise productivity of smaller firms while lowering input costs for the large firms, as is being currently done for scrap metal.<br />
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For more information, please visit <a href="http://www.worldbank.org/uganda" rel="nofollow">The World Bank in Uganda</a><br />
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Tue, 03 Sep 2013 17:19:00 -0400Rachel K. SebuddeUganda: Invest at home to promote a deeper regional market http://blogs.worldbank.org/africacan/uganda-invest-at-home-to-promote-a-deeper-regional-market
<P><IMG alt="" align=left src="http://blogs.worldbank.org/africacan/files/africacan/uganda_economic_update.jpg" width=240 height=148>“Uganda might lose the market in South Sudan, if deliberate efforts aren’t put in place to sustain it”, said Uganda Investment Authority Chairman, Patrick Bitature during a hard-talk discussion at the February 14th launch of the <A href="http://documents.worldbank.org/curated/en/2013/02/17291756/uganda-economic-update-bridges-across-borders-unleashing-ugandas-regional-trade-potential-vol-2-3-main-report">Uganda Economic Update – Bridges across Borders: Unleashing Uganda’s Regional Trade Potential</A>. <BR>Bitature argued that Uganda’s supplying of South Sudan was more circumstantial than strategic.<BR>&nbsp;<BR>“Food items like rice, matooke [green bananas], maize and sorghum that Uganda is exporting to South Sudan will soon be grown there, once stability returns. Uganda instead needs to add value to these exports”, he said.<!--break--></P>
<P>This viewpoint echoes the Economic Update’s findings that while Uganda has the potential to feed the region through more food exports, it must improve productivity to remain competitive. It must also move beyond food exports to emphasize trade in manufactured goods and services.<BR>&nbsp;<BR>Over the last five years, South Sudan became the main trading partner for Uganda, consuming 38 percent of its exports, in grains, processed foods, iron, steel, cement, paints, plastics, cosmetics and pharmaceuticals. However, Uganda’s reliance on natural advantages and insecurity of its neighbors is dangerously unsustainable. <BR>In the food sector, for example, other competitors include Zambia, Mozambique and South Africa, all food surplus producers. Tanzania also often produces a food surplus. In 2011, Tanzania exported 100,000 tons of maize to the region.</P>
<P>Uganda can remain competitive only if it modernizes and diversifies its agricultural sector. Raising productivity on the farm must be accompanied by improved storage, better and cheaper transport, and connectivity to markets. The largest constraint to getting goods to the markets remain the high transport costs. Currently, many producing areas are connected via seasonal roads. Furthermore, to link to the regional markets, a Ugandan trader pays 30% more in transport costs, than their counterparts in Southern Africa. The costs are 70% higher when compared to traders in America and Europe.<BR>&nbsp;<BR>Over 84% of Uganda’s trade relies on poor road infrastructure because of a dysfunctional rail and water transport system. Transport costs are exacerbated by bad logistics including high berth and yard congestion at ports, excessive dwell times for ships, low operating efficiency, ineffective regulation, and non-tariff barriers.&nbsp; For Bitature, a functioning railway system would reduce the number of commercial trucks on the road by 500 cars per day. This would result in huge savings from lower congestion and road maintenance costs.<BR>&nbsp;<BR>Overcoming these constraints requires steep investments.&nbsp;&nbsp; Uganda must therefore do its own homework, and do it quickly, to be able to tap more regional trade. While deeper regional integration is the gateway to unlocking greater trade opportunities, the message for Uganda remains the same: raise productivity in key strategic sectors and get products to the market at a competitive price.<BR>&nbsp;<BR>Deeper regional integration will support Uganda’s own development by allowing for development of regional public goods and policies that support free flow of products, capital and labor. Quick gains can be made in adopting more efficient modes of road, rail and water transport; eliminating non-tariff trade barriers; and exploiting service exports in tourism, transport and logistics, education, and professional services. <BR>&nbsp;<BR>In-depth discussion of these issues can be found in the <A href="http://documents.worldbank.org/curated/en/2013/02/17291756/uganda-economic-update-bridges-across-borders-unleashing-ugandas-regional-trade-potential-vol-2-3-main-report">World Bank’s First Uganda Economic Update – “Bridges across Borders – Unleashing Uganda’s Regional Trade</A>.&nbsp;</P>Tue, 26 Feb 2013 15:42:55 -0500Rachel K. Sebudde